After a 900 million write down, Microsoft is building a Surface RT 2

When the Surface RT launched back in October, it represented a new direction for Microsoft as the platform was running on an ARM processor. By using an alternative CPU, this opened up the possibilities for other vendors to supply the chips that power Microsoft devices. But, with sales not lining up to expectations, Microsoft was forced to write-down the current Surface RT inventory by $900 million and lowered the price of the Surface to help move units.

Couple the write-down with an aggressive advertisement campaign; you would expect that more RT units would by coming off the shelves and into consumer hands. But, until Microsoft gives us more information about sales of the RT tablets, we can only take at face value what the market shows and at this time, the $900 million write-down speaks for itself.

Knowing that Microsoft had trouble moving RTs and that some vendors are now backing away from the platform, whispers began to make the rounds that Microsoft might drop the platform and avoid taking another huge loss. But, if at first you don’t succeed, try, try again, right?

Microsoft is building a Surface RT 2 and for those of you who are hoping for a total revamp of the tablet, lower your expectations. The Surface RT 2 is in the process of being built and according to our internal sources, looks very similar to the current iteration of the Surface RT.

Expect to see the Surface RT 2 to look visually similar to the current RT but with a modest spec bump under the hood. This should not come as a major surprise as the Surface form-factor works quite well and upping the specs will help to keep the RT competitive with market comparable.

Current rumors suggest that there will be a Snapdragon 800 powering the device (check out our hands on here) which will increase horsepower with a smaller footprint on the battery.

While we don’t have any additional information on a launch, expectation would suggest that when Windows 8.1 launches, we should see a Surface announcement around that time.

We will be quite curious to see the price-point for the launch as Microsoft has already shown that at the $499 price point, the RT is a tough sell to the consumer despite its value proposition of including Office.  The current $350 price point appears to be much more consumer friendly and also handily undercuts it’s strongest completion from Apple.

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That's nice, for a peripheral portion of their business. What is Microsoft planning for their core business, i.e., non touch-centric laptops and desktops? If a business' "foundation" product or service is faulty, what difference does it make with the "peripherals?"

I might be interested in a smaller version.

I'm a little confused by these x86-based 8.1" tablets. If there's any obvious fit for Windows RT and ARM that ought to be it. Maybe the Surface range will soon reflect this.

CygnusOrion said,
So give up on Windows tablet eh?

There is no give-up, but the days when Microsoft's OS was the guy that you needed to do anything are over, there are now apps, and these apps are not working on the Microsoft OS due to management arrogance and mistakes.

People will buy Surface RT, but not in millions.

Google and Apple will sooner or later do the same mistakes, and Microsoft may take over again, who knows.

There are tons of apps waiting to be built, and there are tons of API that are waiting to be implemented in an operating system, look at everything around you, it is missing something:

Your house does not know who you are, because your house is not smart, it needs a PC and an OS with API that will make it smart.

Your car is not smart neither, well, it has no clue who the driver is or what is he doing. your TV is getting smart, thanks to Android.

Look at home robotics, yeh, it does not exist, and just everyone needs it, it needs an OS that makes it exist, and that is not there yet.

And the list goes on, and I am sure that Microsoft will simply miss all of them

John Nemesh said,

Nothing wrong with a Window PRO tablet. RT needs to die screaming, though.

Not everyone needs Pro and a x86 tablet, even fewer who buy a tablet need the desktop and desktop apps. The problem RT faced from the start was that the core apps were bad, the updated ones in 8.1 should've been there from day 1 on 8.0 but weren't. With enough good apps and games in the store there's no reason not to get a RT device over a Pro x86 device depending on your needs.

John Nemesh said,

Nothing wrong with a Window PRO tablet. RT needs to die screaming, though.

Why exactly? Windows RT does most, if not all, of the things that iOS and Android tablet's do. I buy a tablet to use it as tablet, not a laptop or PC, so why do I need desktop apps on a tablet?

TCLN Ryster said,

Why exactly? Windows RT does most, if not all, of the things that iOS and Android tablet's do. I buy a tablet to use it as tablet, not a laptop or PC, so why do I need desktop apps on a tablet?

Although I disagree that RT needs to die as stated above, I have a surface pro and I love that I can use it like a tablet when I need and then dock it at home and use it as a desktop; all in one small package. I don't even own a laptop anymore.

I use desktop apps on my tablet when it is performing desktop tasks while docked and sometimes when not docked.

The price was set towards the iPads, which - in hindsight - wasn't the best thing to do.

Also, and this has been discussed to death, MS failed in explaining the difference between RT and a 'regular' W8 tablet.

As soon as people started moaning on the big wide web, MS was in for another old fashioned complain fest......

I remember being so ****ed off the day MS announced the pricing of both Surface RT models along with their Touch and Type Covers. They were simply priced too high than what it should have been. At those prices MS wasn't going to recoup losses because they weren't going to sell enough at those prices to do so...the prices were out of range for most people that would be interested enough in buying one . The prices they have now are the exact prices the thing should have launched at. With the advertising they did do and a nice $350 starting price point they would have moved a lot more tablets and covers...their losses would not have been 900 million. They could have built up enough userbase that would have created a nice starting point for future Surfaces. MS cant fail on the pricing this time. Windows RT is not Windows 8 and with damn near every other OEM not doing RT models anymore, this leaves a great opportunity for MS and Nokia to really own this space. When Nokia launched their first WPs, they were good phones priced LOWER than their compeitions flagships...MS has to keep this new pricing for Surface RT even on the new models.

Lord Method Man said,
Getting closer every day to the original Surface RT being $200 with touch keyboard cover.

Maybe after the new ones are out, and that's still a maybe.

It will be nice to see the Microsoft Surface 2 Tablet (RT) but that one will unfortunately not sell as well

Don't understand me wrong, the Windows Tablet is pretty powerful, it is the only one that runs 2 apps on the same screen at the same time, it presents the apps in a beautiful tablet mode start screen, and all the new work that is done on Windows is to make the tablet mode better.

As a consumer I most likely will get an Android tablet, here is why:

- Nexus 10 is cheaper, and the next Nexus 10 is expected to be the same price and more powerful.
- I love Google Maps, I am not sure if you used that think on Android, but once you realize that it can find anything for you and locate it and take you there, there is just no going back, and Google Maps (the app) is not available for Windows 8 Tablet.
- I love Google Plus (the app on Android) and that App is not there on Windows 8
- I have tons on Photos on Google Drive, I know I can move them to SkyDrive, but SkyDrive is limited to a 100GB and I am one of the people who uses more, so anyway Google Drive is not available on Windows tablet.
- YouTube, have you seen the latest Android App released 2 days ago, just beauty, and that is not available on Windows as app.
- The list goes on

Windows 8 Tablet is a nice OS, a pretty good one, but Ballmer's / Microsoft's arrogance made everyone hate them, and the results are clear, their OS lacks of critical apps.

Windows 8.1 Tablets will not sell, but this is not because Windows 8.1 or 8.2 is not good, it is just missing the apps this time.

I moved away from Google a while ago, and seriously don't miss it.

Only use still is Google search, as Bing doesn't really get the result I need over here.

Nice to see a decent response on here.


- Nexus 10 is cheaper, and the next Nexus 10 is expected to be the same price and more powerful.

Have you considered the alternatives such as the Dell or the ASUS? What does the extra power give you? Is the i5 too much power?


- I love Google Maps, I am not sure if you used that think on Android, but once you realize that it can find anything for you and locate it and take you there, there is just no going back, and Google Maps (the app) is not available for Windows 8 Tablet.

What features specifically? I agree, the website doesn't have anywhere near the experience that the app has. I've found Bing maps to be somewhat acceptable, but I'm not in the US so I don't get all the benefits of Bing. The Nokia maps apps on my phone are far better than google maps in my experience. It'll be interesting when Nokia make the desktop equivalents, like they did with Music.


- I love Google Plus (the app on Android) and that App is not there on Windows 8

Fair enough

- I have tons on Photos on Google Drive, I know I can move them to SkyDrive, but SkyDrive is limited to a 100GB and I am one of the people who uses more, so anyway Google Drive is not available on Windows tablet.

Really? What does the app do that the web client does not? Android's file system has been anything but intuitive.

- YouTube, have you seen the latest Android App released 2 days ago, just beauty, and that is not available on Windows as app.

This has got to be the most anti-competitive bull**** I've ever seen pulled. But from a consumers perspective, I can see how you wouldn't care. I can attest to the fact that the Youtube apps are not up to par.

- The list goes on

Windows 8 Tablet is a nice OS, a pretty good one, but Ballmer's / Microsoft's arrogance made everyone hate them, and the results are clear, their OS lacks of critical apps.

To be honest, it doesn't lack critical apps. You are commited to the google eco system and are unwilling to move. There is nothing wrong with that, but it doesn't mean the Microsfot solution isn't a suitable alternative. There are many things that the MS ecosystem provides that the google one does not.

Arrogance? Can you back this up? There is unjustified hate for Microsoft from many areas. It's common to find brand loytalty like this everywhere. Cars is another area people seem to have misplaced loyalties.


It's not the apps. The only app you have mentioned is Youtube, and the website works just fine on a 10" screen.

I personally think a lot of issues come from all the "IT Experts" running around bagging Windows, despite unable to leave their bias at the door. I'm afraid this is an exercise for the marketing department.

S3P€hR said,
Surface PRO II would be my choice

Yes please. I have a couple Androids for lightweight work, leave the budget stuff to them. I'll take a tablet that runs applets and full programs any day.

If they increase the horsepower, it's a first-day ordering for me.

My Surface RT is awesome, I use it far more than my iPad mini.
Just can't wait.

The reason the Surface, and all RT based devices, aren't selling is because of Metro. Windows 8 is getting a few sales because most people don't know that there are still machines you can buy with Windows 7. Since it comes preloaded. of course there are going to be some sales. Also, with Windows 8 you can still run desktop apps, but with RT you are stuck with pure Metro CRAP, and no one wants that crap except for Dot Matrix.

Have you used a W8 tablet with Metro? It sounds like you didn't.

The UI works just great on my Surface Pro, and the App Store is something that Windows needed for a long time.

Things have been made simpler for people, and it was neccessary. Outside these forums, there are lots of people who don't really understand pc's and all stuff surrounding it.
Heck, in my years as a application admin I had to explain people how to store bookmarks.

8.1 is a good step forward, for pro's (ahem...) and more modest users alike.

runningnak3d said,
The reason the Surface, and all RT based devices, aren't selling is because of Metro. Windows 8 is getting a few sales because most people don't know that there are still machines you can buy with Windows 7. Since it comes preloaded. of course there are going to be some sales. Also, with Windows 8 you can still run desktop apps, but with RT you are stuck with pure Metro CRAP, and no one wants that crap except for Dot Matrix.

You're comment is wrong for so many reasons. Let's go through them one by one:
* The reason the Surface, and all RT based devices, aren't selling is because of Metro

Most reviews of Metro on a tablet have been positive. Combine this with the fact that iOS has been revamped and looks much closer to Metro gives it an Apple stamp of approval. Sure it doesn't have the Apple polish, but it's far more consistent and usable than Android. That doesn't seem to deter people from purchasing those devices.

* Windows 8 is getting a few sales because most people don't know that there are still machines you can buy with Windows 7

I assume you have a credible source to back this up?


* Also, with Windows 8 you can still run desktop apps, but with RT you are stuck with pure Metro CRAP, and no one wants that crap except for Dot Matrix.

Correct, RT is an iPad competitor. It has been marketed as such. When was the last time you ran an OSX app on the iPad/Phone? From my usage, the tablet is a fantastic consumption device. Too bad about XBox music, but Rdio, Spotify etc are all suitable functioning alternatives.

runningnak3d said,
The reason the Surface, and all RT based devices, aren't selling is because of Metro. Windows 8 is getting a few sales because most people don't know that there are still machines you can buy with Windows 7. Since it comes preloaded. of course there are going to be some sales. Also, with Windows 8 you can still run desktop apps, but with RT you are stuck with pure Metro CRAP, and no one wants that crap except for Dot Matrix.

Oh look. A troll has appeared. Mods?

I'd take a Surface RT that is the size of the Acer Iconia W3. The 8" form factor of that is awesome. I wish the W3 didn't have such a bad screen.

dbam987 said,
I'd take a Surface RT that is the size of the Acer Iconia W3. The 8" form factor of that is awesome. I wish the W3 didn't have such a bad screen.

Different strokes for different folks. I have both the RT and a 7" Acer Iconia android tablet, and I *much* prefer the RT for general web browsing and remoting into my other machines.

As a Surface RT owner, all I can say to a "modest spec bump" is, no.
Make it a good one MSFT. Tegra 3 is slow. Tegra 4, is better, but the S800 should be a winner. Not only that, but increase the screen res now. 1366 x 768 needs to die in a fire, especially with improvements for high res displays in 8.1

ZipZapRap said,
As a Surface RT owner, all I can say to a "modest spec bump" is, no.
Make it a good one MSFT. Tegra 3 is slow. Tegra 4, is better, but the S800 should be a winner. Not only that, but increase the screen res now. 1366 x 768 needs to die in a fire, especially with improvements for high res displays in 8.1

Shouldn't NVidia have something new in the works by now? Tegra 4 isn't that new iirc, and if they're going to be the exclusive SoC for the Surface RT then why not come out with something new and use that to market and show off your new chip.

Performance comes at a cost of power, heat etc...

The device is sluggish *at times* such as resuming IE10 with 20+ tabs. But then I remember it runs the same processor as my phone. There is a device out there with more performance AND a better resolution, it's called the Surface Pro.

I'd really like to see the real world issues people seam to face with 1366x768 on a 10" display.

GP007 said,

Shouldn't NVidia have something new in the works by now? Tegra 4 isn't that new iirc, .

Tegra 5 should launch January, but Nvidia suck balls at getting design wins. Where Tegra 3 made a lot of inroads, Tegra 4 is a huge fail for them in terms of getting it into devices.

DarkerSeb said,
I'd really like to see the real world issues people seam to face with 1366x768 on a 10" display.

Tegra 5 should launch January, but Nvidia suck balls at getting design wins. Where Tegra 3 made a lot of inroads, Tegra 4 is a huge fail for them in terms of getting it into devices.

“real world” is that the screen is mush. Microsoft did an awesome job of using their brilliant display tech to increase contrast and therefore readability, but it's nowhere near as good as the smaller Nexus devices, or the retina iPads. People are spoilt for good screen quality now, and Microsoft are behind the game here on that front.
Personally, I use my Surface for the Kindle app a LOT, and it's not the greatest experience. Also Zinio is about a million times worse as well. For text, the screen is poor, but watching Match of the Day etc, 720p videos, is fine.

Our huge complaint from a business point of view was there was no WWAN in it... how can we give this as a field device if they can't get a cellular connection to get our data without the need for a hotspot?

A device like this is all about compromises. It's obviously never going to be the perfect device for everyone and was never intended to be. There are currently a few similar alternative's that do support cellular modems, and I'd wager money that the Nokia tablet will contain a WWAN device.

Says in the article that it's rumoured to have a Snapdragon 800. When Nvidia's CEO has said it will have a Tegra 4, and many sites reported this, including Neowin.

Snapdragon 800 would be better though. But Intels upcoming Atom redesign (Bay Trail) would be the best move, it will be faster than either of those ARM SoC's and run all x86 software while using the same or less battery power. It would be the ultimate tablet for most people. MS wont do that though as then they wont have anything for Windows RT. A massive shame.

Supporting multiple platforms is the best move considering the convergence of the processor/platforms at the moment.

Microsoft have a tablet that supports the Intel platform, which means the Atom is not required for the Surface RT.

I'd consider the Atom as a positive option for the Surface Pro, but I think that may **** off the OEMs if they provide too many options, who knows.

I would of gotten a Surface RT if there was size around 7 inches and priced between $200-$275. I tried a bigger 10in Android tablet and didnt use it much because of the size. I got a new Nexus 7 and I use that thing all the time.

techbeck said,
I would of gotten a Surface RT if there was size around 7 inches and priced between $200-$275. I tried a bigger 10in Android tablet and didnt use it much because of the size. I got a new Nexus 7 and I use that thing all the time.

Only time will tell but I don't see why a Surface Mini isn't already in the works, Windows 8.1 has updates specifically for 7" screens, that's as big of a hint as anything.

GP007 said,

Only time will tell but I don't see why a Surface Mini isn't already in the works, Windows 8.1 has updates specifically for 7" screens, that's as big of a hint as anything.

Well, hopefully then. But I wont be buying another tablet for a little while but maybe by the time I am looking for a new one, a smaller model will be available.

Astra.Xtreme said,
If they do make a 7", they'll have to give it a tremendous upgrade in specs to even compete with the Nexus.

Depends on how well it performs really.

techbeck said,
I would of gotten a Surface RT if there was size around 7 inches and priced between $200-$275. I tried a bigger 10in Android tablet and didnt use it much because of the size. I got a new Nexus 7 and I use that thing all the time.

Nexus is a great deal, I bought one as well. Great for travel, but as a couch companion I prefer the larger tablets. The latest version of Windows 8.1 fixes most of the issues I had with Surface RT. It is now a responsive system, that does almost everything better than Android and IOS, but that screen on Surface RT is so low res.. That machine could definitely use a spec bump in the resolution department.

techbeck said,
I would of gotten a Surface RT if there was size around 7 inches and priced between $200-$275. I tried a bigger 10in Android tablet and didnt use it much because of the size. I got a new Nexus 7 and I use that thing all the time.

I also personally believe 7 inches is where real tablet sizes should be. I've always found the iPad to be too big.

AWilliams87 said,

I also personally believe 7 inches is where real tablet sizes should be. I've always found the iPad to be too big.

Typing on a 10" tablet is much much easier than on a 7", but obviously the trade-off is portability.

Astra.Xtreme said,

Typing on a 10" tablet is much much easier than on a 7", but obviously the trade-off is portability.

It just depends on what you want to do with it. If it's reading and watching videos but very little typing/work/semi-work tasks then 7" is best. If you do want to type things out though then 10" works better.

techbeck said,
I would of gotten a Surface RT if there was size around 7 inches and priced between $200-$275. I tried a bigger 10in Android tablet and didnt use it much because of the size. I got a new Nexus 7 and I use that thing all the time.

Yeah, I think the price hurt them a lot.

This really highlights why Windows 8.1 supports MANY devices with many resolutions. Horses for courses and everyone has slightly different workflows lending towards different sized units. Personally I prefer the 10.1".

Only reasion i would buy it or a Surface Pro 2 is if it had 3G/4G.

(Where i live hotspoting it is not possible because of crap plans from telstra)

Luke Baldwin said,
Only reasion i would buy it or a Surface Pro 2 is if it had 3G/4G.

(Where i live hotspoting it is not possible because of crap plans from telstra)

If it does use the new Snapdragon 800 SoC then it should have 3G/4G/LTE etc. That's part of the package and I don't think there's a snapdragon version without it? Or maybe those who do Wifi only tablets turn that bit off?

I think the biggest thing stopping this from happening is MS. Windows 8.1 don't seem to have built-in support or API's for 3g/4g/phone features. And MS don't seem to want Windows to approach Windows Phone's area of things. I'd really like that feature though.

NoClipMode said,
I think the biggest thing stopping this from happening is MS. Windows 8.1 don't seem to have built-in support or API's for 3g/4g/phone features. And MS don't seem to want Windows to approach Windows Phone's area of things. I'd really like that feature though.

You don't know what you're talking about. Windows has APIs for cellular modems.

Luke Baldwin said,
Only reasion i would buy it or a Surface Pro 2 is if it had 3G/4G.

(Where i live hotspoting it is not possible because of crap plans from telstra)

http://www.telstra.com.au/internet/mobile-broadband/

I have a device similar to this which I pair with my laptop/tablet/phone etc and find it very convenient, especially regarding the battery life savings.

Any reason you don't run one of these? I'm not trying to say your reasons are silly, there is definitely a large market for a model with an in-built modem, I'm just wondering about your experience.

NoClipMode said,
I think the biggest thing stopping this from happening is MS. Windows 8.1 don't seem to have built-in support or API's for 3g/4g/phone features. And MS don't seem to want Windows to approach Windows Phone's area of things. I'd really like that feature though.

Nonsense. Windows 8 (and by extension RT, subject to driver support) has full support for cellular devices, as indicated by all the "metered connections" settings. They even demonstrated them back when 8 was first announced.

The Verge just reported that Nokia is going to release a 10.1 inch Windows RT tablet running on the Snapdragon 800 quad core SoC with 2GB of RAM and looking like a Lumia.

It wouldn't surprise me if the Surface RT 2 has the same specs as Nokias tablet as well but we did have the NVidia CEO saying they're working on Surface so I figured we'd get a Tegra 4 powered version? Either way, if they keep the current price then that'd be a good start.

GP007 said,
The Verge just reported that Nokia is going to release a 10.1 inch Windows RT tablet running on the Snapdragon 800 quad core SoC with 2GB of RAM and looking like a Lumia.

It wouldn't surprise me if the Surface RT 2 has the same specs as Nokias tablet as well but we did have the NVidia CEO saying they're working on Surface so I figured we'd get a Tegra 4 powered version? Either way, if they keep the current price then that'd be a good start.


yup, the next surface will probably be running on the Tegra 4, which isn't in any device today. The Tegra 3 powered Surface RT really struggles with performance. I'm pretty confident that the Snapdragon 800 in the Lumia tablet would perform a ton better just like how the Dell XPS duo smokes the Surface RT. So much for having similar across the board with ARM.

FalseAgent said,

yup, the next surface will probably be running on the Tegra 4, which isn't in any device today. The Tegra 3 powered Surface RT really struggles with performance. I'm pretty confident that the Snapdragon 800 in the Lumia tablet would perform a ton better just like how the Dell XPS duo smokes the Surface RT. So much for having similar across the board with ARM.

That said though I wonder where the Tegra 4 falls when it comes to performance? Compared to the Snapdragon 800 that is.

GP007 said,

That said though I wonder where the Tegra 4 falls when it comes to performance? Compared to the Snapdragon 800 that is.


Not a single device has shipped with the Tegra 4 yet. Everyone is choosing the Snapdragon 800 in favor of the Tegra 4.

FalseAgent said,

Not a single device has shipped with the Tegra 4 yet. Everyone is choosing the Snapdragon 800 in favor of the Tegra 4.

Yeah, but there should be some benchmarks out to compare to, though I never looked for them to be honest.

Spicoli said,
A write-down just means they over-estimated the future profit potential from the investment. They'll provide a more reasonable outlook to investors this time.

People think it means one thing when the write-down means something else. Big corporate accounting is complicated, the $900m was largely on the new price cuts which means they're lose future profits and decided to take the hit in one go now. Though I'm sure they saved on taxes and other things in the process.

I think the problem is people that never took accounting tend to think of of everything in terms of cash. This is more along the lines of planning in your retirement scheme that your house will gain 10% market value per year but then conditions change and tell you it will be flat to single digit. For home finance you do it all in your head, but in business accounting you have to record that anticipation and change in it.

Say that again? The write-down has nothing to do with any "future" profit potential. It was an inventory write-off. Inventories are booked at cost and profit is recognized when sold. The $900 million write-off was a pure loss to the bottom line to adjust the inventory valuation. Simply put, MS paid $100 per unit but only can sell it for $10 for 100K units in inventory, thus the devaluation of inventory. Or the shelf-life of these inventories have exceeded the expected the normal period resulting in devaluation.

doh said,
Say that again? The write-down has nothing to do with any "future" profit potential. It was an inventory write-off. Inventories are booked at cost and profit is recognized when sold. The $900 million write-off was a pure loss to the bottom line to adjust the inventory valuation. Simply put, MS paid $100 per unit but only can sell it for $10 for 100K units in inventory, thus the devaluation of inventory. Or the shelf-life of these inventories have exceeded the expected the normal period resulting in devaluation.

They never once said it was do to inventory only, it was a mix of inventory on tablets but also accessories and the price cuts. It's when people try to simplify it that they get it wrong.

Spicoli said,
A write-down just means they over-estimated the future profit potential from the investment. They'll provide a more reasonable outlook to investors this time.

*kind of*... A write down is technically the devaluing of an asset (Surface Inventory, etc.). That is very bad...

with that said, I don't think anyone should be surprised that they are working on a new Surface. Likely with a different approach.

Before blindly defending Microsoft's position, why not look at the 10Q submitted by Microsoft. The write-off is directly related to "inventory adjustments".

GP007 said,

They never once said it was do to inventory only, it was a mix of inventory on tablets but also accessories and the price cuts. It's when people try to simplify it that they get it wrong.

Price cuts are not reflected until sold. Look at the 10Q. Inventory adjustments, not A/R write-off or reserves for sales discount.

I am sure MS will be more conservative with their forecast now and will not make more than 10 units to be displayed on Best Buy. Ballmer is gone and new CEO is not going to bring his *$$ on line by another write off.